We’re thrilled to be back with another Real Estate post today. We began a new series: “Buyer Beware.” So far, we’ve covered septic systems + flooding. Some of our sweet readers have found these super helpful, so if you’re in the market or may be soon, be sure to check them out. You can catch up on that, as well as all our Real Estate posts, here!
If you’re in the market now or will be in the future, we want to provide you with valuable information for navigating the real estate market so we can help you make that next purchase. We hope these posts help you ask the right questions about that next Real Estate transaction.
after – see the entire renovation here. This is not an example of a flipper white house, but one we did for some amazing clients. It would be quite the opposite, actually.
But first, let’s keep all the legal humans happy: This series aims to explore the housing market and what I believe we can expect from it or what you should know about it. Please understand we’re not offering personal financial or investment advice. We highly encourage you to talk to your local Realtor and licensed financial adviser. {Side note: If you need help finding a good local Realtor, let us know no matter where you live. We’ve helped several people with this not-so-little task. Our latest was a sweet family moving within the Chicago area!}
before
Caveat Emptor
If you’re not familiar with this series, here’s the intro: “Caveat Emptor” is a Latin phrase meaning, let the buyer beware, and one you should fully understand if you’re buying Real Estate. In its most simplistic form, the buyer holds all responsibility for research, due diligence, and understanding the conditions and possible dangers and hazards of the purchase. So, welcome to a new series, where we talk about everything on which you should be fully informed.
Depending on your state, disclosures about the property can mean vastly different things. There are actually 21 states that do not require a seller to disclose that a home has flooded. Can you imagine? You purchased a home only to learn it flooded, and the mold remediation was not done correctly.
With every state being a little different, we can’t get into all the specifics of where everyone lives, but your local Realtor should be able to guide you in that process. If you need help finding a Realtor in your location, let me {Jamin} know. I know many great Realtors all over the country, and I’m sure we can help you.
In this series, I want to cover some “buyer beware” issues that I think can apply to everyone, no matter where they live. Things that you might not have thought about or not have given much thought to. These are things that may not rise to the level of a flooded house, but they might be things that would be nice to know before buying the house or things that are even bigger.
Buyer Beware: Flipper White
We’ve all seen the houses that someone purchased, did some minimal renovations on, and then listed for sale again, a.k.a. ‘flipper houses’. You can usually pick them out because they’re what we like to call ‘flipper white’. They’re basically to 2024 as “Builder’s Beige” was to 2000. It can sometimes be the new version of minimum effort in the modern day. Chances are someone watched a little too much HGTV, and now this house is white on white on white. Crisp and shiny and new, the psychology behind it presents as a blank canvas for the new potential buyer. All in the name of fresh. Or something.
But should you buy a flipper house?
My gut response is to be aware and cautious. I want to explain my reasoning and some things you should know.
Buyer Beware: Flipper White = Profit
If you ever find yourself looking at a home that has been flipped, you need to remind yourself of the baseline for the current owner: make money and generally make money at all costs. The only goal for a flipper is to turn a quick profit on a home. That is it, and never let anyone tell you any differently. Yes, I know there are always exceptions to the rule, but really, Shelia, do you think you’ll be the one to find that exception?
Understanding the driving motive of the flipper keeps you grounded. Unlike a home builder, they aren’t looking for a happy customer to spread their name to other potential homeowners. They’re one and done; they could care less if you trash-talk them to your friends; chances are none of your friends would have ever purchased from them anyway. So they don’t care about their reputation, just their profit.
And if profits are all that matter, then you’ll begin to cut corners anywhere and any way you can. That is the basic motif of every flipper. Buy cheap, repair cheaper, and sell high. It’s literally that simple.
So, it behooves you to know how to spot a bad flip and a decent flip.
Buyer Beware: Flipper White – Your Agent
Let me start with the professional you have, or will, hire to help guide you through the process. I’m not going to tell you not to hire your bestie, who is an agent; I’m just going to encourage you to know who you are hiring, along with their strengths.
Are you hiring someone who just looks the part with their latest fit or someone who can explain what to look for when a load-bearing wall might have been taken out? Does your agent brag about his mad negotiating skillz, or can he tell you about the function of a girder? Who you hire matters, and we will dive into why in the next post.
Buyer Beware: Flipper White – Permits
If you’re looking at a flipper house, the first step should be to call the codes department. You’ll want to know if they acquired a permit for whatever work they did. 90% of the time they didn’t, and sometimes that’s okay.
Let’s start with the sometimes; if the work is purely cosmetic, then there really is no need for a permit. By cosmetic, I mean new tile, paint, lights, and surface stuff.
If you think that they have moved walls or changed electrical or plumbing, there needs to be more concern if they didn’t pull a permit.
Generally, permits are not pulled for three reasons:
1) Speed: they don’t want the inspection process to slow them down.
2) They are doing things that aren’t allowed.
3) They don’t know any better.
All three a reasons for concern.
If speed is their goal, which normally fits in the plan somewhere, you will need to be concerned about craftmanship. If they didn’t know any better, you should be super concerned about safety and quality. If they’re doing things that aren’t allowed, you should proceed with extreme caution.
I say “extreme caution and not walk away” because it depends on what they did. Once upon a time, we purchased a house where a guy did something that violated multiple codes on the county, state, and federal levels. We knew how it could be fixed and be okay, but we also knew we didn’t want to be responsible for his mess-up. Because he didn’t disclose it in the listing, he was between a rock and a hard place. Long story short, we made him confess to the appropriate people, fix it to their {and our} satisfaction, and take a percentage off the selling price. So you don’t always have to walk away, but you always need to proceed with caution.
Buyer Beware: Flipper White – Spotting the Structural
If you’re looking at a flipper house, I hope you didn’t wear your nice clothes, and if your agent did, maybe you should reevaluate who you hired because you’re going to need to get dirty. You want someone who understands structures to be there because you need to spend some time in the attic and the crawlspace.
When I look at a flipper house, here are the things I look for:
• Obvious places walls should have been, but are not. And if they are not, can I a) tell that a beam was put in, b) and is that load carried to the foundation?
• Look for”new wood” in the crawlspace or the attic. If you see new wood, why is it there? Is it simply there to shore up an older house? Is it there to carry the new load? Is there a lot of it indicating that there were some serious structural issues with the house? If it is in the attic, why? Did they change the roof? If so, did they create dead spots that will be prone to leaking?
• Look for fresh runs of pipe or electrical wire. You can spot this normally by fresh sawdust on the ground or by looking at the holes and seeing that they don’t look aged. If there are some, then you know that they ran new lines. If there is not a permit, you’ll want to take note and question if it was done correctly.
• Check the block work and concrete; does any of it look new or like it has been disturbed? If it has, you’ll want to know why and if it was sealed back up properly.
Buyer Beware: Flipper White – Cosmetic
A lot of flippers will use shiny new cosmetic changes to hide structural issues; they rely on the idea that if the surfaces looks clean and nice our minds will be tricked into thinking it’s a good house. And it works a lot. So don’t let new and shiny trick you into ignoring the above structural things.
Don’t let new floors fool you into missing how unlevel they are. Don’t let new paint hide that poor drywall finishing. Grout close in color to the tile can often hide poor installation.
Mainly, details matter. So don’t let new and shiny be confused with craftmanship. Everything looks good when it’s new, but step back and look for the craftsmanship. Check the trim and what those cabinets are made of.
Materials are normally cheap in a flip, so pay attention to them, especially any brand names you can spot. You don’t want a shiny new faucet that’s super cheap just to break and flood the house later.
Buyer Beware: Flipper White – Should I Buy It?
In the beginning, I said to be cautious and not immediately rule it out if you’re looking at a flipper house. Sometimes, when done by the right people, they can be a good house. Even sometimes when done by the wrong people, if you can identify the problems and know how to fix them they can still be a good house. The biggest takeaway is to look at the house with the right mindset and with the right skill set. If you don’t have this, make sure your agent does. You don’t want to wait until the inspector shows up because they won’t look at it with the right mindset. Why wait for someone else to do a job you can do today? That lost time could also cost you finding the right house.
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Real Estate is an interesting beast, and having an agent who can pull the curtains back and help navigate what will most likely be the biggest purchase of your life is essential. As they say, you don’t know what you don’t know, and that’s where a good realtor comes in. {If you need help in hiring a Realtor, check out our post here.}
If you’re in the Middle Tennessee area, I’d love to meet you and help you find the perfect home; you can sign up here so we can start the process. And even if you aren’t in Middle Tennessee, contact us here, and we will take care of you no matter where you live. There is no reason to go it alone.
When it comes to renovations, we have you covered there, too. See our client spaces here + contact us here to work with us! See a little more of what we do here. We hope to hear from you!
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